By Bill Tiedje and Nat Williams, Iowa Farmer Today
Bayer and Monsanto officials announced Sept. 14 a merger agreement had been reached between their boards, with Bayer acquiring Monsanto for $128 per share in an all-cash transaction.
In a conference call with international press, officials from both companies discussed their vision for creating a leading global ag company and being an “innovation engine for the next generation of farming.”
Bayer AG CEO Werner Baumann said, “The acquisition of Monsanto is driven by our strong belief that this combination is a powerful response to the enormous challenges facing farmers and the ag industry overall.
“We are creating a company that can offer integrated solutions, from seeds and traits to crop protection to digital agriculture that help farmers manage the increasing global food demand.
“Immediately, we will benefit from our ability to offer a broader variety of seeds and traits and crop protection products, and from the smart combination and usage of products based on agronomic science. Furthermore, we would create a leading platform in digital farming.”
Monsanto expects a shareholder meeting in late 2016 or early 2017 to vote on the merger agreement, and closing of the transaction, including regulatory approval, is expected by the end of 2017, Baumann said.
Liam Condon, Bayer AG board member and head of the Crop Science Division, said the merger will allow the companies to provide farmers with integrated solutions, providing short-term and long-term benefits.
“In the short term, we will have the ability to offer farmers a broader variety of seeds and crop protection products, and by using Bayer and Monsanto’s sales forces and infrastructure, we can reach farmers in more places with more products and services,” Condon said.
“Mid to long term, the combined company plans to provide growers with integrated solutions based on the smart combination and optimized usage of products, agronomic advice through digital agriculture solutions.”
As an example, he described the technology available from both companies that could benefit a soybean plant throughout its lifecycle, combining seeds and weed management technologies from Monsanto with seed treatments and pest and disease management technologies from Bayer.
“As a concrete example, based on such an integrated approach, new, resistance-breaking herbicide tolerance systems may become available that are based on optimal parallel development of traits, herbicide chemistry and high-quality germplasm, all of which are available within our soon-to-be combined organization,” Condon said.
Baumann said bundling of products is already possible, and the company’s ambition is not to prevent farmers from having choice but to create better products.
Hugh Grant, chairman and CEO of Monsanto, said over the past three or four years, farmers’ reception of such integrated crop solutions has been “phenomenal.”
“Farmers are starving for innovation,” Grant said. “They are looking for the edge that brings them that next kilogram or bushel of grain.”
Grant said his company’s board of directors performed an evaluation of the value of an enhanced ag portfolio.
“Ultimately, the board unanimously determined a combination with Bayer represents the most compelling value for our shareowners, employees and, critically, the growers and customers that have come to rely on us,” Grant said.
The combination of Bayer Crop Science and Monsanto’s annual pro forma research development budget, based on 2015 operations, is about 2.5 billion euro, or $2.8 billion.
Pro forma sales of the combined agricultural business amounted to 23 billion euro ($25.8 billion) in calendar year 2015, according to a news release.
Baumann said the company has plans for the global Seeds and Traits and North American commercial headquarters to be in St. Louis, Mo.; the global Crop Protection and overall Crop Science headquarters in Monheim, Germany; a Digital Farming division based in San Francisco, Calif.; and a presence in Durham, N.C., as well as many other locations throughout the U.S. and around the world.